Section 233B (4) of the Companies Act, 1956 gives the cost auditor same powers as the financial auditor has under Section 227(1). In addition, Rule 6 of the Cost Audit Report Rules also requires the company and every officer thereof, including the persons referred to in sub-Section (6) of Section 209 of the Act to make available to the cost auditor, within 135 days from the close of the financial year of the company, such cost accounting records, cost statements, other books and documents, annexure and Performa to the Report, duly completed as would be required for conducting the cost audit, and shall render necessary assistance to the Cost Auditor so as to enable him to complete the cost audit and submit his report within the time limit specified in rule 5. Section 233B(6) further provides that it shall be the duty of the company to give all facilities and assistance to the cost auditor so as to enable him to complete the audit and send the report within the prescribed time limit.
Rights of Cost Auditor
The powers of the cost auditor under sub-Section (1) of Section 227 are as under:
- Right to access at all times the books of account and vouchers of the company, whether kept at the head office of the company or elsewhere.
- Entitled to require from the officers of the company such information and explanations as he may think necessary for the performance of his duties as an auditor.
Responsibilities of Cost Auditor
The duties of the cost auditor are also similar to those of the (financial) auditor of the company has under sub-Section (1) of Section 227 (Section 223B (4)).The duties of the cost auditor inter-alia include:
- To file the intimation to Central government about his/her/its appointment within 30 days of the receipt of formal letter in Form 23D along with the copy of formal letter.
- To ensure that the proper books of accounts as required by Cost Accounting Records Rules have been kept by the company so far as it appears from the examination of those books and proper returns for the purpose of his audit have been received from branches not visited by him;
- To ensure that the Cost Audit Report and the detailed cost statements are in the form prescribed by the Cost Audit Report Rules by following sound professional practices i.e. the report should be based on verified data and observations may be framed after the company has been afforded an opportunity to comment on them;
- The underline assumptions and basis for allocation and absorption of indirect expenses are reasonable and are as per the established accounting principles;
- If the auditor is not satisfied in any of the aforesaid matters, he may give a qualified report along with the reasons for the same;
- Sending the Report to the Cost Audit Branch within 180 days from the end of the financial year with one copy to the company;
- Sending his replies to any clarification, that may be sought by the Cost Audit Branch on his report.
- Sending such replies within 30 days from the date of receipt of communication calling for such clarification.
